Lottery: The Hope for Upward Mobility

Newswise — “The poor play the lottery, the rich play the stock market.” This comical statement seems to hide both hope and the bitter truth. An economics professor at Chulalongkorn University invites us to understand why many Thais put their hopes into lotteries and analyzes how their popularity relates to social inequality, upward mobility and corruption.

The 1st and the 16th of every month seem to be the day of hope for millions of Thai people, especially in low and middle-income groups. Even though the chances of winning a big prize such as the 1st prize are only 1 in a million or 0.0001 percent, and the probability of winning a particular prize is only 1.41%, many Thais continue to buy lottery tickets no matter what the economic situation is like.  With the hope that “this time, luck may be on our side” and “I will get to move up the ladder and become a millionaire myself like all the others.”

Many people may view such beliefs as false hopes of risk-takers who do not rely on their abilities and efforts. But if we look at this with understanding, Assistant Professor Dr. Thanee Chaiwat, Director of the Chulalongkorn Experimental Economics Center (CEEC), says that we will find a complex and bitter truth — the failure to address the income and economic disparities of the country that cause the majority of the country’s population to approach lotteries, Ponzi schemes, and other gray businesses to have a chance to advance socially, have a better social status and quality of life.

Lottery, hope, and social inequality

Lotteries are available in all countries, but people’s expectations from the lottery in each country may vary, said Asst. Prof. Dr. Thanee observes.

In many countries, lottery buyers may only hope for some fun in winning, more than getting rich. But in Thailand, gambling with numbers is serious. It can be seen from the live broadcast of every lottery draw, the news coverage of the lucky lottery winners or the lottery, and many other news media that hints at potential winning numbers that could make some people rich. 

Does this lottery popularity picture reflect a hopeful or hopeless society? Why do so many Thais love to buy lottery tickets despite the fact that there is only a small glimmer of hope?

“We often hear people say that buying a lottery ticket is buying hope, but more deeply, most people hope to win a lottery ticket because they have almost no hope in their lives to become wealthy. We live in a society where the chance of social mobility for the poor is practically nil.”

The lower their socioeconomic status, the more difficult it is to move up to the middle class and even more so to become rich.  So, placing high hopes in winning a lottery is a clear reflection of social inequality.

“If I work hard and can get rich in this country, I may be less interested in the lottery.  But we will see that more poor people who work harder and are more exhausted than I am, but there is almost no hope of a better position in life,” said Asst. Prof. Dr. Thanee.

Lotteries are therefore “the Hope” that many see as a risk worth risking!                         

How does the state capture block social mobility?

Investing in stocks, cryptocurrency, foreign exchange trading, Ponzi schemes, and other gray businesses seems to be trending among the younger generation and the middle class who hope to get rich quickly, while many people turn to lotteries. But no matter the products, “they are all based on the hope of economic and social mobility,” said Asst. Prof. Dr. Thanee.

“If we happen to belong to the lower or middle classes, especially the former who did not attend reputable schools, or were born into good families, don’t own a business, nor any assets for collaterals in starting a business, and then hope to become rich or move up the social ladder, what can we do? Buying a lottery ticket is the only hope in life to have the opportunity to have 6 million baht in the bank account. There is no denying that having 6 million baht in the account from work is not easy, so the lottery denotes an opportunity to move up the social ladder.”

So why is there such a low rate of upward mobility in Thai society?  Asst. Prof. Dr. Thanee poses a very pertinent question and further discusees “State Capture”, a term that first appeared in a World Bank document, published in 2000.

Asst. Prof. Dr. Thanee explains the meaning of “state capture” as being about how large capital groups could influence state policy, especially economic policy. The term emerged right after the collapse of the Soviet Union, resulting in the emergence of a small group of countries where capitalists or large capital groups control resources, be it oil or energy, and these capital groups influenced the government through economic dominance and could dictate the direction of economic policies.

“In the beginning, we did not realize the problem of state capture because the capitalists’ role in economic policy helped the economy to continue growing. But today, we are starting to see the negative consequences of state capture, namely the monopolization of funds and financial resources by these capitalists who formulated economic policies that favor the industries they are holding for increasing profits, hence intensifying income inequality.”

The state capture by these capitalists enabled the rich to get richer, while the poor find it harder to access resources, and cannot have access to wealth because the economic policies do not allow the poor to grow, but allow the rich access to profit.

“Most people in the middle to lower classes, no matter how hard they work or struggle for money, can only get richer up to a point. As time goes by, the inequality grows exponentially based on legitimacy determined by policies that benefit businesses.”

The problem of economic inequality does not affect only Thailand, but many other countries in ASEAN as well.  The millionaires and wealthy families are still the same people they were 20-30 years ago.

“Thailand is a small country, not very wealthy, but we have an astounding number of the world’s top billionaires. This is a reflection that this group of people is becoming richer and richer, although the country’s GDP is not very high. The lower-class people who make up the majority of the country may have a better life, but at a smaller rate, or are comparatively poorer.”

Asst. Prof. Dr. Thanee offers a comparison with case studies of Western countries with economic freedom, for example, the United States, where new billionaires over the past three decades consist of some new faces.

“There may be some of the same names, but new faces keep popping up on the list, which means that people in their country have a high chance of social mobility.”

Domination of power through economic policymaking is a major cause of high inequality. Asst. Prof. Dr. Thanee concludes.

“State capture is evident in a country whose government is incompetent in economic management.  This is normal and has nothing to do with morality or ethics.  Our country may have a government that comes from bureaucrats, the military, or politicians who don’t have an aptitude for business. If this happens, government advisers come from big companies, and these people may unknowingly have the opportunity to formulate policies that are more conducive to big companies. State capture takes on many forms, such as funding political parties, use of the business sector to promote political parties or mutual support through connections.”

Stop state capture with competition laws

Asst. Prof. Dr. Thanee continues that to stop the state seizure by capital groups, the government must be serious and sincere in legislating and enforcing competition laws, as the problem of economic inequality begins with the formulation of economic policies that often benefit large capital groups (the rich) who are the country’s minority.

“Suppose the government issues policies to support the automotive industry or agricultural exports, there will only be a few large capital groups that gain benefits, access, and participation in policymaking, which will automatically affect inequality, intentionally or unintentionally. In this case, SMEs, and smaller businesses with less powerful voices benefit less from the policy, partly because we wish to achieve high economic growth quickly.”

“If the promotion of trade competition isn’t good enough, large capital groups will gain more profits, and monopolize the market more easily, such as in segments like retail, energy, food, and agriculture.  Therefore, western countries often promote competition law because it prevents business monopolies.”

Economic Monopoly in the Modern World

Economic monopolies in the modern world have an ingenious form and often leave most people feeling satisfied even though they may be exploited or their wages oppressed. Asst. Prof. Dr. Thanee explains,

“Let’s say I monopolize the ownership of convenience stores that are abundant in the country, i.e., 90 percent. I tend to monopolize the market, meaning I don’t have to keep the wages low. I can pay at a normal rate or quite well, but I make higher profits from selling products at a higher price.  Since there is no competition, I can sell products that are my house brand directly with more profit, and get richer.”

Asst. Prof. Dr. Thanee continues “To whom do these convenience stores sell little tubes of toothpaste, cream sachets, and various retail items? They are sold to low-income workers because these people cannot afford to stock up. It is a complex exploitation compared to the exploitation of old that normally took the form of wage oppression.  This new form of exploitation comes with convenience and consumer satisfaction. It is unconscious extortion that yields higher profits without competition. This is a difficulty in the modern business world. Therefore, there must be regulations with the competition law, which Thailand has not yet mastered.”

Two policies that drive “hope” in society

To address economic inequality, Asst. Prof. Dr. Thanee proposes that the government set two main policies: one, earnestly create measures that promote trade competition; and two, enact policies that promote opportunities for ordinary people to become prosperous entrepreneurs. For example, access to loans that enable small businesses to grow, industries promotion that is tailored to the ability of individuals, fund and opportunity distribution for artisan work, design, crafts, etc.

If the ties between capital groups and the government can be properly reduced, the lower classes of society will have access to capital and opportunities to compete more fairly, so that they can enjoy “the hope of a good life and a fair chance of social mobility”.  Only then that we may see fewer people paying for false hopes by buying lottery tickets, or placing their future on high-risk investments.